Richard Bruton (Dublin North Central, Fine Gael)
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Question 202: To ask the Minister for Transport if his attention has been drawn to the deficit in the pension coverage of retired aviation staff; the Government's position in relation to any flotation of this company; and if proceeds from such a flotation could be in part contributed to make up the pension deficit. [9599/05]

Richard Bruton (Dublin North Central, Fine Gael)
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Question 206: To ask the Minister for Transport if he has had recent meetings with the retired aviation staff regarding deficits in their pension arrangements; if he has proposals on how this issue might be addressed; and if he will make a statement on the matter. [9600/05]

Martin Cullen (Waterford, Fianna Fail)
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I propose to take Questions Nos. 202 and 206 together.

The pension scheme in question, the Irish airlines (general employees) superannuation scheme, is a multi-employer scheme which, in addition to Aer Lingus and DAA staff, also includes a private sector company, SR Technics, formerly FLS Aerospace. I am advised that a full actuarial assessment of this pension fund is carried out every three years and a review of the fund's ability to pay increases in line with inflation is carried out annually.

The last actuarial valuation was carried out in March 2003 and at that time the scheme satisfied the minimum funding standard included in the Pension Act 1990. The next full actuarial valuation was due in March 2006 but the trustee decided to bring this forward to the end of March 2005. The report is expected to be finalised in the coming months. In the interim, the trustee has used its discretion, on the advice of the scheme's actuary, to grant pension increases in line with the CPI again this year. Pensioners will be formally advised of this in April in the normal way.

While the payment of pensions is always dependent on the actuarial position of the scheme, the advice is that the scheme is able to continue to pay the current level of pensions to existing pensioners. However, the question of whether such pensions can continue to be increased in line with inflation depends on the performance of the scheme going forward. Such increases are and always have been discretionary.

The pension entitlements for employees of commercial State bodies including Aer Lingus and the Dublin Airport Authority, formerly Aer Rianta, are matters primarily for the trustee, the members of the relevant scheme and the companies involved. The State has no involvement in the funding of these schemes. If a deficit arose, the rules of the pension scheme provide that the trustee must decide what action to take but the rules also indicate that there is no obligation on the part of either employers or members to increase contributions. I assume the trustee, employers and staff would work together in those circumstances to try and agree a mutually satisfactory outcome.

Numerous meetings have taken place between RASA representatives and the companies and also with previous Ministers and officials from my Department and the Departments of the Taoiseach and Finance to discuss the pension scheme. I met representatives of the group on 19 January. Despite detailed examination, there has been no obvious solution to the RASA concerns. However, I indicated at that meeting that I would keep the matter under review with the companies concerned.

With regard to the possible flotation of Aer Lingus, I briefed my colleagues at Cabinet yesterday in relation to the current status of my deliberations on a number of key aviation issues, including the future of Aer Lingus. I am anxious, in the interests of the airline, to move forward on this as a matter of urgency and I will bring specific proposals to Government shortly.

With regard to the suggestion that proceeds from a flotation of the airline could be in part contributed to make up a potential pension deficit, the Aer Lingus Act 2004 provides that funds received in respect of the sale shall be paid into or disposed of for the benefit of the Exchequer. Moreover, the question of an injection of State funds does not arise. Such a proposal would run counter to established policy in this area and would, in any event, be challenged by the European Commission as a state aid.